MY BROTHER’S WIDOW GAVE HIS HOME AWAY. WHAT CAN I DO?

QWhen my brother died last year, he left no will and his wife got everything. She has gifted her house to one of her sons, who now plans on selling his own house. Will he have to pay capital gains tax (CGT) on selling his own house? My other nephews got nothing from their father’s estate. Do my nephews have any claim on their father’s estate?

AThere is no CGT on the sale of a family home, or as the Revenue call it, a Principal Private Residence, as long as it qualifies as such by not being used for commercial purposes (other than through the Rent A Room scheme, which provides an exemption).

A widow is entitled to twothirds of her husband’s estate if there is no will. This is known as her ‘legal right share’. She can require that the family home is given to her in satisfaction of her legal right share. Normally she should pay the difference into her husband’s estate. However, in cases of hardship, she may also apply to the courts to have the home given to her without paying the difference or by paying whatever is reasonable or affordable. Your nephews could try to insist their mother pays the difference. But they may lose a court case if she can prove she is hard-pressed financially.

QI read in your column that if you are aged 65 you can earn up to €36,000 and pay no tax. Our income was about €60k gross so I thought I could offset €36k, which would go a long way to reducing tax – or so I thought. But I was told, sorry, age exemption only applies if you earn up to €36k and if you go above it you pay tax on the lot! I was gobsmacked. Could you please explain how this age exemption works?

AThe full tax exemption applies only to income up to €36k per couple aged 65 and over unless they have children. And it’s the age of the older spouse that counts.

If you go over €36k as a couple, you’re taxed on the lot, which is a bit of an anomaly. But then the whole tax and welfare systems are riddled with them.

In fairness, they have to set limits somewhere and they do try to ease the pain with marginal relief and relief for qualifying children.

Exemption limits are increased by €575 for each of your first two children, who are under 18 or incapacitated and €830 for every child after that. Marginal relief works by allowing you to avail of the full tax exemption up to €36k plus qualifying child increases – but you must pay 40% tax after that.

And so this is only worthwhile up to a certain income that depends on your credits and reliefs.

Here’s an example of how marginal relief works:

Jim, aged 68, with two qualifying children has income of €38,000 in 2016. The exemption limit that applies is €37,150 (€36,000 + €575 for each child). So he pays 40% tax on anything above that figure.

However, if you have a lot of credits or health expenses, you may do better if taxed normally as these will kick in and reduce your bill in the normal way. Revenue allow it to be worked out both ways and give you whichever is more beneficial.

QI live in a rural area near Carrickmacross. There is no landline broadband available at the minute. But Eir have carried out some work in the area, laying fibre optic cable. But I have heard that Eir have exclusivity for the first 12 months in rural areas where they install fibre. Is this true?

AAn Eir spokesman said: ‘As it happens, Carrickmacross was added on November 8, so Fibre broadband is ready to order. It is not true that we have exclusivity for any length of time following fibre rollout in an area.’